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Ethereum News in 2022: What Is Money in the Metaverse?

Ethereum News in 2022: What Is Money in the Metaverse?

What Is Money in the Metaverse in 2022? What Will Ethereum Be in 2022?

DeFi, NFTs, stablecoins, and other cryptocurrencies all got their start on Ethereum. What about the following year?

In conjunction with CoinDesk's Future of Money Week, we've written this post.

Blockchain-based smart contracts are at the heart of Ethereum's mission to create a safe, decentralized environment in which to host applications of all kinds. This past year, decentralized finance (DeFi) and non-fungible tokens (NFT) have grabbed center stage in the world's attention, demonstrating to everyone the potential benefits of blockchain technology.

Ethereum's vast potential is only beginning to be realized thanks to scalability products that can increase performance in response to changes in processing demands; in fact, Ethereum's co-creator, Vitalik Buterin, has his sights set on decentralizing everything from social media to gaming to governance and much more.

In its infancy, Ethereum has mostly served as a platform for the trading and lending of cryptocurrency assets (Uniswap and Aave), as well as the purchasing and selling of digital art (Open Sea). In addition to the introduction of second-layer platforms built on top of Ethereum, such as Arbitrum and Optimism, and technological solutions such as ZK rollups, Ethereum will become more accessible to decentralized social media networks such as Reddit.

The requirement for consumers to hold and spend ether, Ethereum's native asset, will be a common theme running through all use cases.

Ethereum is the key to gaining access to blockspace on the Ethereum network, whether it be for the purpose of developing new apps, utilizing existing applications, or moving tokens between several wallets.

As much as gasoline is to a car, the native asset is to the network. Following the implementation of EIP 1559, blockspace customers purchase and burn the asset in order to participate in the digital economy. At some point in the future, ether will be used to stake and safeguard the network as well.

Ether's utility as a fuel has resulted in it becoming one of the most popular trading pairs on decentralized exchanges (DEX).

What is money in the metaverse, and how does it work?

Ethereum, other base-layer protocols (such as Solana and Avalanche), and the "metaverse" will expand the concept of money well beyond what it is currently, when it is restricted to cash.

Protocols are already raising cash, and investors are valuing their portfolios in ether rather than dollars or even stablecoins, as opposed to traditional financial instruments (tokens pegged to the value of a fiat currency). The usage of ether as money, on the other hand, does not invalidate fiat currency, stablecoins, or other forms of store of value. It is merely a complement – and one that has the potential to become a form of cash in the virtual world.

The demand for crypto assets, such as ether, is still much more responsive than it is for stablecoins or dollars, making them an excellent investment rather than a currency itself (for now). However, as the Ethereum ecosystem grows in size, the value of the ether currency increases as a result.

At the moment, speculators outnumber actual blockchain users by a wide margin, but a thriving ecosystem is changing that as ether is being utilized for DeFi, NFTs, validation, social media, and other applications. In fact, in Coinbase's third-quarter financial report, the business stated that it has observed a significant shift in the number of customers who are genuinely utilizing blockchain technology by removing their tokens from exchanges.

The data illustrates how on-chain users have increased in tandem with the number of new Coinbase accounts, indicating that users are really interested in interacting with applications on the Ethereum blockchain. Cheaper alternatives to Ethereum's mainnet, or live version, have gained even more traction, with Polygon claiming a one-day dominance over the mainnet in terms of active users early in the month of October. In addition, Arbitrum has onboarded 275,000 consumers who are looking for lower-cost blockchain engagements, according to the company.

For assets that were previously illiquid, tokenization of assets and composability between DeFi apps are only just beginning to open up new, trading markets for those assets. Assets that can be exchanged against each other, used as collateral, and transferred to any part of the world in an instant begin to behave much more like money than they do like property or stores of value.

The Web 3 workforce, according to Julien Bouteloup, founder of Stake Capital and core developer at decentralized exchange Curve, has expressed a strong preference for being compensated in token equity rather than stablecoins, according to Bouteloup. Even if this is a side consequence of the bull market and growing valuations, employees are likely to be genuinely interested in being a part owner of the projects on which they are employed.

Imperfect metaphors abound in the world of cryptocurrencies, and more broadly in the world of Web3. Ethereum is a "black forest," and the right-click button on a computer mouse has become a stand-in for a whole way of thinking about the cryptocurrency. "Gas" can now be added to the increasing list. Gas fees are not indicative of actual liquid fuel usage or environmental impact; rather, they are similar to a "tip" that you might give to a bouncer in order to cut the queue for a nightclub.

In this example, the bouncer represents an Ethereum miner, the club represents a finished block of transactions, and the line represents a group of anxious nerds wanting to get in before Dog takes the stage.